LME copper prices are likely to firm up further during the current week and fears that the conductor metal may tumble below the $1,650 mark are unlikely to materialise. There is a strong possibility that spot prices will breach the $1,700 per tonne mark owing to depleting stocks.In the domestic market, however, the trend of sluggish prices is likely to continue. Last week, copper prices in the domestic market hovered at around Rs 115 per kg owing to relatively low offtake. Further, with the mid-term poll, the consumer industry has postponed its purchases till April, and with large consignments imported in early this month, there has been stockpiling in the yards/wholesale markets, traders said. This is likely to put pressure on the domestic copper prices during the next few weeks.
On the other hand, reports indicated that LME prices have been steady in the previous week aided by a consistent depletion of stocks in LME warehouses. Though the week began on a weaker note and copper settled at $1,670 pertonne Monday last, a consistent decline of stocks sent the settlement price up to $1,678 on Wednesday. Inventories declined further by 800 tonnes on Wednesday and by 1,150 tonnes on Thursday pushing the spot price further up to $1,691 per tonne.
LME warehouse stocks have been falling as physical deliveries are being taken from the LME warehouses at various locations, implying that actual user demand will continue to rise in the short term in the international markets. Lower demand from the Asian markets had resulted in low activity in the international metal market since the past few weeks.
However, the European and US demand has remained steady due to increased construction activity. This week, the Asian demand for the red metal is likely to rise, analysts say. For one, there is likely to be some buying from China as a fallout of the closure of two of its largest smelters for annual maintenance in December end.
Also, a rising yen may spur some Japanese buying too. Taiwan may also be forced to enterthe market as it has depleted its stocks considerably. The American and European demand for the metal is likely to remain stable this week too. This combined with marginally higher Asian demand and falling inventories is likely to see international copper prices continuing to rise during the week.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
